Dynegy Announces Lender Approval for Restructuring and Refinancing Transactions and Filing of...

Energy Editors/Business Editors

HOUSTON--(BUSINESS WIRE)--July 28, 2003

Dynegy Inc. (NYSE:DYN) today announced that it received more than 99 percent approval from its lenders to consummate a series of previously announced long-term restructuring and refinancing transactions.

Specifically, the lenders approved certain amendments to Dynegy's credit facility that, among other things, permit (a) the previously announced private offerings of second priority senior secured notes and convertible subordinated debentures, (b) the repurchase of up to $650 million of senior notes pursuant to a pending tender offer and consent solicitation and (c) the exchange of the Series B Preferred Stock held by a subsidiary of ChevronTexaco Corporation for $225 million in cash and $625 million in new securities.

"Throughout our self-restructuring, we have respected our bank group and developed a positive working relationship with them. We are pleased with this strong level of support for our long-term refinancing and restructuring transactions," said Bruce A. Williamson, president and chief executive officer of Dynegy Inc.

The effectiveness of the credit agreement amendment is subject to certain conditions, including the consummation of the proposed private offerings and the use of proceeds therefrom to prepay certain indebtedness under the credit facility. The credit facility amendment requires that Dynegy raise at least $1.5 billion of proceeds through the proposed private offerings before any such proceeds may be used to make the $225 million cash payment contemplated by the Series B Preferred Stock restructuring transaction. The Series B Preferred Stock transaction, which is permitted under the credit facility amendment, remains subject to approval by the board of directors of Dynegy and internal management of ChevronTexaco, definitive documentation and other terms and conditions to be set forth therein, including the consummation of the proposed private offerings and receipt of applicable regulatory and other approvals.

Dynegy intends to use all of the proceeds from the proposed private offerings, together with existing cash on hand, to repay outstanding indebtedness, including notes purchased in the tender offer and consent solicitation, certain indebtedness outstanding under the credit facility, amounts outstanding under the secured financing tied to its Midwest generation assets, and certain transaction fees and related expenses. In addition, if Dynegy raises at least $1.5 billion of proceeds in the proposed private offerings, it intends to make the $225 million cash payment to ChevronTexaco in connection with the Series B Preferred Stock restructuring transaction.

Form 8-K

Dynegy also filed a Current Report on Form 8-K today pursuant to Regulation FD. The Form 8-K contains certain information that is included in offering circulars being delivered to potential institutional investors in Dynegy's previously announced private offerings.

About Dynegy Inc.

Dynegy Inc. provides electricity, natural gas and natural gas liquids to wholesale customers in the United States and to retail customers in the state of Illinois. The company owns and operates a diverse portfolio of energy assets, including power plants totaling more than 13,000 megawatts of net generating capacity, gas processing plants that process more than 2 billion cubic feet of natural gas per day and approximately 40,000 miles of electric transmission and distribution lines.

Certain statements included in this news release are intended as "forward-looking statements." These statements include assumptions, expectations, predictions, intentions or beliefs about future events, particularly the consummation of the restructuring and refinancing transactions described above. Dynegy cautions that actual future results may vary materially from those expressed or implied in any forward-looking statements. Specifically, Dynegy cannot assure you that the necessary approvals will be obtained or that the capital markets or restructuring transactions described above will be consummated on the terms Dynegy currently contemplates, if at all. More information about the risks and uncertainties relating to the forward-looking statements are found in Dynegy's SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2002, as amended, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, which are available free of charge on the SEC's web site at http://www.sec.gov.